Agenda item

The Streetscene Project Manager’s report outlined proposed arrangements for constituting and operating the Board of Directors for East Devon Environmental Services Ltd.  The report explained that the company was formally created and registered at Companies House in November 2025 and had subsequently been renamed as East Devon Environmental Services Limited.  Two senior officers from the Council had been appointed as Company Directors, enabling it to be registered and to operate.   It was intended that these appointments were a short-term measure while long-term arrangements for the Company Board were agreed and recruitment took place.  Governance arrangements outlined in previous Cabinet reports created a Company Board of Directors consisting of the Managing Director, a Finance Director and three Non-Executive Directors.

It was noted that the Managing Director had been recruited and was due to start work on 16 February 2026.  The role was as both a staff member and a Director.  It was intended that the Monitoring Officer would formally register the postholder as a Director of the LATCo within 15 days of commencing their appointment.

There had been extensive discussion among stakeholders about roles within the Board and how to ensure it operated effectively.  The report addressed and the Committee considered the roles of the Chair of the Board, the Finance Director and how the Company Secretary function would be delivered.  It was noted that Association for Public Service Excellence (APSE) were supporting administrative arrangements for the Board and had been instructed to develop role profiles for the Chair and other Non-Executive Directors (included in the report).

The role of the Chair of the Board was set out in the report and discussed by the Committee.  It was proposed to delay the appointment of the Finance Director and that alternative arrangements be made for financial scrutiny.  A finance business partner or manager would be recruited into the LATCo staff.  The role of executive Finance Director would be retained as a role on the Board which could be appointed at a future time by a recommendation of the Board of Directors to the Shareholder Committee. 

Although there was no legal duty for a Company to have a designated Secretary it was felt that the functions of this role were integral to effective governance and compliance.  In November 2025 the Shareholder Committee agreed to source specialist skills from APSE to carry out this role during the set up and initial trading period.  APSE would act in an advisory capacity to the Board throughout 2026 and would train and support a member of the Board or Company’s management team to take on the role.  It was recommended that decisions on the long-term arrangements for Company Secretary functions were delayed until later in 2026, allowing time for the company and its Board to operate for a period. This would help to ensure that the Shareholder Committee made good decisions based on local circumstances.

The report explained the current structure of the Board was a Managing Director, a Finance Director and up to three Non-Executive Directors (NEDs).  Pausing the recruitment of a Finance Director would leave four active positions on the Board, creating circumstances where voting or key decisions had potential to be tied, requiring the Chair’s casting vote to be used.  Therefore, it was recommended that a fourth NED was created and that the Shareholder Committee appoints to this role.  This would add additional capacity and experience to the Board and would also support effective decision making.

The roles profiles, criteria for appointment and the recruitment process for the NEDs and the Chair were set out in the report.  It was best practice for LATCo Company Directors to have full independence from the Council, reflecting their legal duties to always act in the best interests of the Company.  Although the objectives and interests of the Company were usually aligned with the Council, this was achieved through other governance arrangements, in particular by the Shareholder Committee. Therefore, the appointment of Directors should ensure that they were able to act independently and apply good judgement in all circumstances.  Appointments and removal of Directors were controlled by the Shareholder Committee so it was essential that members of the Committee were involved throughout the selection process.

Clarification was provided in the meeting that the Chair of the Board was also an NED.  It was also clarified that NEDs were office holders under company law, not employees.  It was noted that Directors were treated as employees for the purposes of taxes on income, but not for employment rights legislation.  Suitable contracts would be drawn up by Fitzgerald HR, ensuring that the NEDs were treated appropriately for both employment law and taxation on income. 

The Shareholder Committee agreed that the recruitment panel should comprise of the Chair, Vice Chair and Portfolio Holder – Environment Operations.  The Project Manager suggested that a SHC meeting be held immediately after the NED interviews so that the Shareholder Committee could review and ratify the decision.  The Committee discussed the balance of the Board and the importance of recruiting the right people, which should reflect the nature of the community.

RESOLVED: that

1. the Shareholder Committee (SHC) approve that a Chair for the Board is selected and appointed as outlined within the body of the report.
2. the SHC agree that the Monitoring Officer arranges for the Managing Director to be appointed as a Director of the LATCo within 15 working days of them commencing their appointment. 
3. the SHC agree that selection and appointment of a member of staff to the role of Executive Finance Director is paused for the reasons set out in the report and that the role remains unfilled on the Board until such time as the Shareholder Committee resolve to fill the vacancy.
4. an additional Non-Executive Director (NED) post is created, increasing the total available positions to four.  When appointing NEDs, at least one should have extensive experience of strategic financial oversight and corporate legal and financial compliance, with specific responsibilities for strategic financial governance and compliance.
5. the SHC delegate responsibility to the Director of Place, in conjunction with the SHC Chair, to implement the proposals for recruitment of Non-Executive Directors, as set out in the report. Three members of the Shareholder Committee will form a panel to conduct the selection process and will make recommendations to the Committee for suitable arrangements.